Testing of goodwill impairment

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daljeet
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Joined: 26 Jan 2021, 04:55

Testing of goodwill impairment

Post by daljeet »

Hi, would like to seek your view on below on impairment testing.

Whether there is any option in selecting the method (i.e. either using enterprise value or equity value) when preparing the cash flow projections for impairment review of goodwill arising from business combination arising from acquisition of subsidiary? (CGU is business (Enterprise value) / CGU is subsidiary (Enterprise value)/ CGU is subsidiary (Equity Value)
JRSB
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Re: Testing of goodwill impairment

Post by JRSB »

Those are approaches to valuing a company but bear in mind the goodwill may not be attributable just to the legal entity that was acquired giving rise to the goodwill.
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Marek Muc
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Re: Testing of goodwill impairment

Post by Marek Muc »

equity value refers to, well, equity, whereas impairment test should be carried out for assets only (i.e. ignoring debt of a given entity)
daljeet
Posts: 22
Joined: 26 Jan 2021, 04:55

Re: Testing of goodwill impairment

Post by daljeet »

Thank you for the explanations.
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